Key Takeaways
- Australian shares declined for the fourth straight session, with miners hit hardest.
- The S&P/ASX 200 index is set to lose 3.2% this week, its worst performance since March.
- Miners dropped 3.9% to a one-month low, with BHP and Rio Tinto declining 4.4% and 3.1% respectively.
Australian shares experienced a significant downturn, with the S&P/ASX 200 index declining 1% on Thursday and 1.1% by Friday morning, marking its weakest trade since early June. The index is on track to lose 3.2% this week, its worst performance since early March.
The decline was primarily driven by the mining sector, which dropped 3.9% to a one-month low. Notable miners, BHP and Rio Tinto, saw their shares fall by 4.4% and 3.1% respectively, reflecting broader market concerns over inflation and future interest rate hikes.
Traders were closely monitoring the impact of the Middle East war on energy supplies, with crude prices trading above $100 per barrel. This has heightened inflationary concerns and led to increased government borrowing costs globally, with yields on the 3-year Australian bond surging to 5.038%, a level not seen since May 2011.
Technology stocks also faced pressure, falling 1.7% to their lowest level since late July. Sector leaders WiseTech Global and Xero saw their shares decline by 2.7% and 1.2% respectively, mirroring losses seen on Wall Street.
Energy stocks, however, showed resilience, with the sub-index rising 0.6% and heading for its strongest week since mid-August. Woodside Energy and Santos added 1.1% each, suggesting that investors are still optimistic about the sector's performance despite the overall market downturn.
New Zealand’s S&P/NZX 50 index also ticked down 0.2% to 13,687.80, with the benchmark set to fall 2.4% for the week, its weakest performance since early March. Investors will be closely watching the island nation’s quarterly economic growth figures, scheduled for release next week.
Central bankers’ hawkish commentary has further cemented the prospect of an imminent rate hike in Australia to address sticky inflation due to rising fuel bills. This has led to increased borrowing costs, impacting various sectors of the market.
The broader market sentiment remains cautious, with traders focusing on the ongoing energy crisis and its implications for global economic stability. As the week progresses, investors will continue to monitor these developments and their impact on the Australian market.
